There are few sentences that have truly marked the course of history, certainly among these the famous "I have a dream" by Martin Luther King.
Less poetic, but impactful for global financial markets, was the sentence of the president of the ECB Mario Draghi a year ago, on 25 July 2012:
“Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.”
(Within our mandate, the ECB is ready to do All the necessary to preserve the euro. And believe me, that will be enough.)
Pronounced in a context of very strong tension, in which the risk of a default of one or more countries and relative Domino effect was anything but remote, had the strength to reduce systemic risk within the euro area, thus removing the possibility of a breakup of the euro. In short, a very strong signal addressed to the markets, which immediately showed that they had understood the message.
So let's take a look at the movements of various financial and economic indicators starting from last July 25th:
The graph (click image to enlarge) speaks for itself: investors have abandoned typically defensive positions (primarily gold and silver) to favor those instruments considered more risky, thanks to the clear message launched by the ECB.
The work of the ECB has often been accused by various commentators and politicians of weakness and myopia, especially when compared with what is fielded by Federal Reserve and from Bank of Japan. However, it must be recognized that if the euro did not explode like a supernova (the conditions were all there a year ago) it is precisely thanks to the announcement that thundered confidently from the Euro Tower.
